ST. LOUIS, July 28, 2015
/PRNewswire/ -- Centene Corporation (NYSE: CNC) today
announced its financial results for the quarter ended June 30,
2015. The following discussions, with the exception of cash
flow information, are in the context of continuing operations.
Premium and Service
Revenues (in millions)
|
$
|
5,184
|
|
|
Consolidated Health
Benefits Ratio
|
89.1
|
%
|
|
General &
Administrative expense ratio
|
8.5
|
%
|
|
Diluted earnings per
share (EPS)
|
$
|
0.72
|
|
|
Total cash flow from
operations (in millions)
|
$
|
350
|
|
|
Michael F. Neidorff, Centene's
Chairman and Chief Executive Officer, stated, "Our strong second
quarter results offer further evidence of Centene's positive
financial and operating momentum. Our pending Health Net
acquisition will enhance our long-term growth opportunities by
adding greater product diversity and scale."
Second Quarter Highlights
- June 30, 2015 managed care
membership of 4.6 million, an increase of 1.3 million members, or
38% compared to the second quarter of 2014.
- Premium and service revenues for the second quarter of
$5.2 billion, representing 39% growth
compared to the second quarter of 2014.
- Health Benefits Ratio of 89.1% for the second quarter of 2015,
compared to 88.9% in the second quarter of 2014 and 89.8% in the
first quarter of 2015.
- General and Administrative expense ratio of 8.5% for the second
quarter of 2015, compared to 8.6% in the second quarter of 2014 and
8.5% in the first quarter of 2015.
- Operating cash flow of $350
million for the second quarter of 2015.
- Diluted EPS for the second quarter of 2015 of $0.72, including $0.01 of diluted EPS associated with Health Net,
Inc. (Health Net) merger related expenses, compared to $0.39 in 2014.
Other Events
- In July 2015, Centene announced
that the Company and two direct, newly formed subsidiaries of the
Company had entered into a definitive merger agreement with Health
Net under which Centene will acquire all of the issued and
outstanding shares of Health Net. The transaction is valued at
approximately $6.8 billion (based on
the Centene closing stock price on July 1,
2015), including the assumption of debt. The transaction is
expected to close in early 2016 and is subject to approval by
Centene and Health Net shareholders and other customary closing
conditions.
- In July 2015, Centurion began
operating under a new contract with the Mississippi Department of
Corrections to provide comprehensive correctional healthcare
services.
- In July 2015, Centene's
Mississippi subsidiary, Magnolia
Health, began operating under a two-year CHIP contract with the
State of Mississippi.
- In June 2015, the Company
received regulatory approval of its previously announced
acquisition of Agate Resources, Inc. The transaction is expected to
close in the third quarter of 2015.
- In May 2015, the Company
completed the acquisition of Fidelis SecureCare of Michigan, Inc. (Fidelis). Fidelis began
operating under a new contract with the Michigan Department of
Community Health and the Centers for Medicare and Medicaid Services
to provide integrated healthcare services to members who are dually
eligible for Medicare and Medicaid in Macomb and Wayne counties in May
2015. Passive enrollment began in July 2015.
- In May 2015, Centene's
Florida subsidiary, Sunshine
Health, was tentatively recommended for a statewide contract award
by the Florida Healthy Kids Corporation to manage healthcare
services for children ages five through 18 in all 11 regions of
Florida. The two-year contract
award is expected to commence in the fourth quarter of 2015.
- In the fourth quarter of 2015, Centene's Louisiana subsidiary, Louisiana Healthcare
Connections, expects to begin operating under an expanded contract
to include behavioral health benefits, and Magnolia Health
anticipates operating under an expanded contract to include the
inpatient benefit for Medicaid and ABD members.
Awards
- In June 2015, the Company was
awarded the Corporate Anti-Bullying Hero Award at Auburn University's Anti-Bullying Summit.
- In June 2015, FORTUNE
magazine announced Centene's position of #186 in its annual ranking
of America's largest companies by revenue.
- In May 2015, at the Case In Point
Platinum Awards, Centene and its subsidiaries were honored with
awards in five categories: Women/Children Case Management,
Disease Management/Population Health, Integrated Case Management
and Embedded Case Management, Managed Care Case Management, and
Nurse Call Center. Centene was also recognized for four
titles in its member educational book series at the Hermes Creative
Awards.
Membership
The following table sets forth the Company's membership by state
for its managed care organizations:
|
June
30,
|
|
2015
|
|
2014
|
Arizona
|
210,900
|
|
189,200
|
Arkansas
|
45,400
|
|
31,100
|
California
|
178,700
|
|
131,100
|
Florida
|
470,300
|
|
313,800
|
Georgia
|
405,000
|
|
373,000
|
Illinois
|
209,100
|
|
29,500
|
Indiana
|
250,400
|
|
200,500
|
Kansas
|
143,000
|
|
146,100
|
Louisiana
|
358,900
|
|
148,600
|
Massachusetts
|
61,500
|
|
47,200
|
Michigan
|
2,700
|
|
—
|
Minnesota
|
10,900
|
|
9,400
|
Mississippi
|
250,600
|
|
97,400
|
Missouri
|
82,600
|
|
58,700
|
New
Hampshire
|
70,800
|
|
39,500
|
Ohio
|
287,100
|
|
225,900
|
South
Carolina
|
112,600
|
|
101,800
|
Tennessee
|
21,400
|
|
21,300
|
Texas
|
969,700
|
|
921,500
|
Vermont
|
2,800
|
|
—
|
Washington
|
214,100
|
|
193,800
|
Wisconsin
|
78,600
|
|
67,300
|
Total at-risk
membership
|
4,437,100
|
|
3,346,700
|
Non-risk
membership
|
176,600
|
|
—
|
Total
|
4,613,700
|
|
3,346,700
|
At June 30, 2015, the Company served 368,900 Medicaid
members in Medicaid expansion programs in California, Illinois, Massachusetts, New
Hampshire, Ohio and
Washington and Indiana HIP 2.0,
included in the table above.
The following table sets forth our membership by line of
business:
|
June
30,
|
|
2015
|
|
2014
|
Medicaid
|
3,300,600
|
|
2,385,500
|
CHIP & Foster
Care
|
230,500
|
|
261,800
|
ABD, Medicare &
Duals
|
414,300
|
|
329,700
|
Long Term Care
(LTC)
|
72,800
|
|
53,500
|
Health Insurance
Marketplaces
|
167,400
|
|
75,700
|
Hybrid Programs
1
|
—
|
|
17,000
|
Behavioral
Health
|
203,900
|
|
182,200
|
Correctional
Healthcare Services
|
47,600
|
|
41,300
|
Total at-risk
membership
|
4,437,100
|
|
3,346,700
|
Non-risk
membership
|
176,600
|
|
—
|
Total
|
4,613,700
|
|
3,346,700
|
|
|
|
1 In
February 2015, hybrid programs were converted to Medicaid expansion
contracts.
|
The following table identifies our dual-eligible membership by
line of business. The membership tables above include these
members.
|
June
30,
|
|
2015
|
|
2014
|
ABD
|
106,100
|
|
89,300
|
LTC
|
53,100
|
|
41,800
|
Medicare
|
8,500
|
|
6,800
|
Medicaid / Medicare
Duals
|
19,700
|
|
1,400
|
Total
|
187,400
|
|
139,300
|
Statement of
Operations: Three Months Ended June 30, 2015
|
|
|
Three Months
Ended
|
|
June 30,
2015
|
|
June 30,
2014
|
|
March 31,
2015
|
(in
millions)
|
|
|
|
|
|
Total
Revenues
|
$
|
5,506
|
|
$
|
4,024
|
|
$
|
5,131
|
Premium Tax and
Health Insurer Fee Revenues
|
|
(322)
|
|
|
(283)
|
|
|
(370)
|
Premium and Service
Revenues
|
$
|
5,184
|
|
$
|
3,741
|
|
$
|
4,761
|
- For the second quarter of 2015, Premium and Service Revenues
increased 39% to $5.2 billion from
$3.7 billion in the second quarter of
2014. The increase was primarily a result of the impact from
expansions or new programs in many of our states, particularly
Florida, Illinois, Louisiana, Mississippi, Ohio and Texas.
- Premium Tax and Health Insurer Fee Revenues were $322 million in the second quarter of 2015,
compared to $283 million in the
comparable period in 2014 and $370
million in the first quarter of 2015. The decrease of
$48 million from the first quarter of
2015 was due to a lower amount of hospital assessments received in
the second quarter of 2015.
- Consolidated HBR of 89.1% for the second quarter of 2015
represents an increase from 88.9% in the comparable period in 2014
and a decrease from 89.8% in the first quarter of 2015. The year
over year HBR increase is primarily attributable to a higher HBR
associated with new programs in two of our states. The sequential
decrease is due to normal seasonality.
- The following table compares the results for new business and
existing business for the quarters ended June 30:
|
2015
|
|
2014
|
Premium and Service
Revenue
|
|
|
|
New
business
|
22
|
%
|
|
26
|
%
|
Existing
business
|
78
|
%
|
|
74
|
%
|
|
|
|
|
HBR
|
|
|
|
New
business
|
91.3
|
%
|
|
91.8
|
%
|
Existing
business
|
88.5
|
%
|
|
87.9
|
%
|
-
- The new business HBR decreased compared to last year as a
result of a higher portion of new business associated with
Medicaid, which operates at a lower HBR.
- The existing business HBR increased compared to last year as a
result of higher acuity business, including Florida LTC, being
classified as existing business in the current year.
- Consolidated G&A expense ratio for the second quarter of
2015 was 8.5%, compared to 8.6% in the prior year. The year over
year decrease in the G&A ratio reflects the leveraging of
expenses over higher revenues in 2015.
- Diluted earnings per share of $0.72 in the second quarter of 2015, compared to
$0.39 in 2014. Diluted earnings per
share in 2014 was impacted by $0.08
of net cost associated with the health insurer fee.
Balance Sheet and Cash Flow
At June 30, 2015, the Company had cash, investments and
restricted deposits of $3.7 billion,
including $82 million held by its
unregulated entities. Medical claims liabilities totaled
$2.1 billion. The Company's
days in claims payable was 45.5, consistent with the first quarter
of 2015. Total debt was $1.1
billion, which includes $150
million of borrowings on the $500
million revolving credit facility at quarter end. Debt
to capitalization was 35.7% at June 30, 2015, excluding the
$69 million non-recourse mortgage
note.
Cash flow from operations for the three months ended
June 30, 2015, was $350 million,
or 4.0 times net earnings.
Outlook
The table below depicts the Company's annual GAAP guidance for
2015.
|
|
Full Year
2015
|
|
|
|
Low
|
|
High
|
|
Premium and Service
Revenues (in millions)
|
|
$
|
20,800
|
|
|
$
|
21,200
|
|
|
Diluted
EPS
|
|
$
|
2.74
|
|
|
$
|
2.82
|
|
|
Consolidated Health
Benefits Ratio
|
|
89.1
|
%
|
|
89.5
|
%
|
|
General &
Administrative expense ratio
|
|
8.0
|
%
|
|
8.4
|
%
|
|
Effective Tax
Rate
|
|
48.0
|
%
|
|
50.0
|
%
|
|
Diluted Shares
Outstanding (in millions)
|
|
123.0
|
|
|
124.0
|
|
|
|
|
|
|
|
|
The Company's guidance excludes merger related costs expected to
be incurred in 2015 related to the Health Net transaction. These
costs are estimated to be between $0.10 and
$0.15 per diluted share for 2015. The transaction is
expected to close in early 2016.
Consistent with our policy, the above table does not include
acquisitions that have not yet closed.
Conference Call
As previously announced, the Company will host a conference call
Tuesday, July 28, 2015, at 8:30 AM
(Eastern Time) to review the financial results for the
second quarter ended June 30, 2015, and to discuss its
business outlook. Michael F.
Neidorff and William N.
Scheffel will host the conference call.
Investors and other interested parties are invited to listen to
the conference call by dialing 1-866-739-7850 in the U.S. and
Canada; +1-412-902-6577 from
abroad; or via a live, audio webcast on the Company's website at
www.centene.com, under the Investors section. Or,
participants can register for the conference call in advance by
navigating to http://dpregister.com/10067851, to receive a dial-in
number upon registration. A webcast replay will be available
for on-demand listening shortly after the completion of the call
for the next twelve months or until 11:59 PM
(Eastern Time) on Tuesday, July 26,
2016, at the aforementioned URL. In addition, a digital
audio playback will be available until 9:00
AM Eastern Time on Wednesday, August
5, 2015, by dialing 1-877-344-7529 in the U.S. and
Canada, or +1-412-317-0088 from
abroad, and entering access code 10067851.
Other Information
The discussion in the third bullet under the heading "Statement
of Operations: Three Months Ended June 30, 2015" contains
financial information for new and existing businesses.
Existing businesses are primarily state markets or significant
geographic expansion in an existing state or product that we have
managed for four complete quarters. New businesses are
primarily new state markets or significant geographic expansion in
an existing state or product that conversely, we have not managed
for four complete quarters.
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a diversified,
multi-national healthcare enterprise that provides a portfolio of
services to government sponsored healthcare programs, focusing on
under-insured and uninsured individuals. Many receive
benefits provided under Medicaid, including the State Children's
Health Insurance Program (CHIP), as well as Aged, Blind or Disabled
(ABD), Foster Care and Long Term
Care (LTC), in addition to other state-sponsored/hybrid programs,
and Medicare (Special Needs Plans). The Company operates
local health plans and offers a range of health insurance
solutions. It also contracts with other healthcare and
commercial organizations to provide specialty services including
behavioral health management, care management software,
correctional healthcare services, dental benefits management,
in-home health services, life and health management, managed
vision, pharmacy benefits management, specialty pharmacy and
telehealth services.
The information provided in this press release contains
forward-looking statements that relate to future events and future
financial performance of Centene. Subsequent events and
developments may cause the Company's estimates to change. The
Company disclaims any obligation to update this forward-looking
financial information in the future. Readers are cautioned
that matters subject to forward-looking statements involve known
and unknown risks and uncertainties, including economic,
regulatory, competitive and other factors that may cause Centene's,
Health Net's, or its industry's actual results, levels of activity,
performance or achievements to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements. Actual
results may differ from projections or estimates due to a variety
of important factors, including Centene's or Health Net's ability
to accurately predict and effectively manage health benefits and
other operating expenses and reserves; competition; membership and
revenue projections; timing of regulatory contract approval;
changes in healthcare practices; changes in federal or state laws
or regulations, including the Patient Protection and Affordable
Care Act and the Health Care and Education Affordability
Reconciliation Act and any regulations enacted thereunder; changes
in expected contract start dates; changes in expected closing
dates, estimated purchase price and accretion for acquisitions.
including our proposed merger with Health Net (Proposed Merger);
inflation; foreign currency fluctuations; provider and state
contract changes; new technologies; advances in medicine; reduction
in provider payments by governmental payors; major epidemics;
disasters and numerous other factors affecting the delivery and
cost of healthcare; the expiration, cancellation or suspension of
our or Health Net's managed care contracts by federal or state
governments (including but not limited to Medicare and Medicaid);
the outcome of our or Health Net's pending legal proceedings;
availability of debt and equity financing, on terms that are
favorable to us; and changes in economic, political and market
conditions; the expected closing date of the Proposed Merger; the
possibility that the expected synergies and value creation from the
Proposed Merger will not be realized, or will not be realized with
the expected time period; the risk that acquired businesses will
not be integrated successfully; disruption from the Proposed Merger
making it more difficult to maintain business and operational
relationships; the risk that unexpected costs related to the
Proposed Merger will be incurred; the possibility that the Proposed
Merger does not close, including, but not limited to, due to the
failure to satisfy the closing conditions, including the receipt of
approval of both Centene's stockholders and Health Net's
stockholders; and the risk that financing for the Proposed Merger
may not be available on favorable terms as well as those factors
disclosed in the Company's publicly filed documents.
This list of important factors is not intended to be
exhaustive. We discuss certain of these matters more fully, as well
as certain risk factors that may affect our business operations,
financial condition and results of operations, in our filings with
the Securities and Exchange Commission, including our annual
reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K.
[Tables Follow]
CENTENE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(In millions
except share data)
|
(Unaudited)
|
|
|
June 30,
2015
|
|
December 31,
2014
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,967
|
|
$
|
1,610
|
Premium and related
receivables
|
1,248
|
|
912
|
Short term
investments
|
140
|
|
177
|
Other current
assets
|
483
|
|
335
|
Total current
assets
|
3,838
|
|
3,034
|
Long term
investments
|
1,541
|
|
1,280
|
Restricted
deposits
|
101
|
|
100
|
Property, software
and equipment, net
|
462
|
|
445
|
Goodwill
|
811
|
|
754
|
Intangible assets,
net
|
148
|
|
120
|
Other long term
assets
|
121
|
|
91
|
Total
assets
|
$
|
7,022
|
|
$
|
5,824
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Medical claims
liability
|
$
|
2,092
|
|
$
|
1,723
|
Accounts payable and
accrued expenses
|
1,004
|
|
768
|
Return of premium
payable
|
289
|
|
236
|
Unearned
revenue
|
68
|
|
168
|
Current portion of
long term debt
|
5
|
|
5
|
Total current
liabilities
|
3,458
|
|
2,900
|
Long term
debt
|
1,139
|
|
874
|
Other long term
liabilities
|
330
|
|
159
|
Total
liabilities
|
4,927
|
|
3,933
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
155
|
|
148
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.001 par value; authorized 10,000,000 shares; no shares issued or
outstanding at June 30, 2015 and December 31, 2014
|
—
|
|
—
|
Common stock, $.001
par value; authorized 200,000,000 shares; 124,812,343 issued and
119,087,944 outstanding at June 30, 2015, and 124,274,864 issued
and 118,433,416 outstanding at December 31, 2014
|
—
|
|
—
|
Additional paid-in
capital
|
891
|
|
840
|
Accumulated other
comprehensive loss
|
(4)
|
|
(1)
|
Retained
earnings
|
1,154
|
|
1,003
|
Treasury stock, at
cost (5,724,399 and 5,841,448 shares, respectively)
|
(101)
|
|
(98)
|
Total Centene
stockholders' equity
|
1,940
|
|
1,744
|
Noncontrolling
interest
|
—
|
|
(1)
|
Total stockholders'
equity
|
1,940
|
|
1,743
|
Total liabilities and
stockholders' equity
|
$
|
7,022
|
|
$
|
5,824
|
CENTENE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In millions,
except share data)
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenues:
|
|
|
|
|
|
|
|
Premium
|
$
|
4,692
|
|
|
$
|
3,331
|
|
|
$
|
8,991
|
|
|
$
|
6,402
|
|
Service
|
492
|
|
|
410
|
|
|
954
|
|
|
691
|
|
Premium and service
revenues
|
5,184
|
|
|
3,741
|
|
|
9,945
|
|
|
7,093
|
|
Premium tax and
health insurer fee
|
322
|
|
|
283
|
|
|
692
|
|
|
391
|
|
Total
revenues
|
5,506
|
|
|
4,024
|
|
|
10,637
|
|
|
7,484
|
|
Expenses:
|
|
|
|
|
|
|
|
Medical
costs
|
4,181
|
|
|
2,960
|
|
|
8,042
|
|
|
5,703
|
|
Cost of
services
|
419
|
|
|
366
|
|
|
821
|
|
|
608
|
|
General and
administrative expenses
|
442
|
|
|
321
|
|
|
845
|
|
|
616
|
|
Premium tax
expense
|
239
|
|
|
253
|
|
|
520
|
|
|
331
|
|
Health insurer fee
expense
|
52
|
|
|
31
|
|
|
107
|
|
|
63
|
|
Total operating
expenses
|
5,333
|
|
|
3,931
|
|
|
10,335
|
|
|
7,321
|
|
Earnings from
operations
|
173
|
|
|
93
|
|
|
302
|
|
|
163
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Investment and other
income
|
10
|
|
|
7
|
|
|
19
|
|
|
12
|
|
Interest
expense
|
(11)
|
|
|
(9)
|
|
|
(21)
|
|
|
(16)
|
|
Earnings from
continuing operations, before income tax expense
|
172
|
|
|
91
|
|
|
300
|
|
|
159
|
|
Income tax
expense
|
84
|
|
|
45
|
|
|
147
|
|
|
79
|
|
Earnings from
continuing operations, net of income tax expense
|
88
|
|
|
46
|
|
|
153
|
|
|
80
|
|
Discontinued
operations, net of income tax expense (benefit) of $0, $1, $(1),
and $1, respectively
|
—
|
|
|
2
|
|
|
(1)
|
|
|
1
|
|
Net
earnings
|
88
|
|
|
48
|
|
|
152
|
|
|
81
|
|
(Earnings) loss
attributable to noncontrolling interests
|
—
|
|
|
1
|
|
|
(1)
|
|
|
1
|
|
Net earnings
attributable to Centene Corporation
|
$
|
88
|
|
|
$
|
49
|
|
|
$
|
151
|
|
|
$
|
82
|
|
|
|
|
|
|
|
|
|
Amounts
attributable to Centene Corporation common
shareholders:
|
Earnings from
continuing operations, net of income tax expense
|
$
|
88
|
|
|
$
|
47
|
|
|
$
|
152
|
|
|
$
|
81
|
|
Discontinued
operations, net of income tax expense (benefit)
|
—
|
|
|
2
|
|
|
(1)
|
|
|
1
|
|
Net
earnings
|
$
|
88
|
|
|
$
|
49
|
|
|
$
|
151
|
|
|
$
|
82
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss) per common share attributable to Centene
Corporation:
|
Basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.74
|
|
|
$
|
0.41
|
|
|
$
|
1.28
|
|
|
$
|
0.70
|
|
Discontinued
operations
|
—
|
|
|
0.01
|
|
|
(0.01)
|
|
|
0.01
|
|
Basic earnings per
common share
|
$
|
0.74
|
|
|
$
|
0.42
|
|
|
$
|
1.27
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
0.72
|
|
|
$
|
0.39
|
|
|
$
|
1.24
|
|
|
$
|
0.68
|
|
Discontinued
operations
|
—
|
|
|
0.02
|
|
|
(0.01)
|
|
|
0.01
|
|
Diluted earnings per
common share
|
$
|
0.72
|
|
|
$
|
0.41
|
|
|
$
|
1.23
|
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
119,003,569
|
|
115,517,366
|
|
118,894,269
|
|
115,244,078
|
Diluted
|
122,965,011
|
|
119,434,516
|
|
122,785,459
|
|
119,094,840
|
CENTENE
CORPORATION AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
Net
earnings
|
$
|
152
|
|
|
$
|
81
|
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
Depreciation and
amortization
|
53
|
|
|
42
|
|
Stock compensation
expense
|
33
|
|
|
23
|
|
Deferred income
taxes
|
(13)
|
|
|
(11)
|
|
Gain on settlement of
contingent consideration
|
(10)
|
|
|
—
|
|
Changes in assets and
liabilities
|
|
|
|
Premium and related
receivables
|
(341)
|
|
|
(161)
|
|
Other current
assets
|
(28)
|
|
|
29
|
|
Other
assets
|
(30)
|
|
|
(29)
|
|
Medical claims
liabilities
|
366
|
|
|
284
|
|
Unearned
revenue
|
(102)
|
|
|
(18)
|
|
Accounts payable and
accrued expenses
|
166
|
|
|
160
|
|
Other long term
liabilities
|
144
|
|
|
10
|
|
Other operating
activities
|
5
|
|
|
2
|
|
Net cash provided by
operating activities
|
395
|
|
|
412
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(58)
|
|
|
(42)
|
|
Purchases of
investments
|
(513)
|
|
|
(475)
|
|
Sales and maturities
of investments
|
276
|
|
|
221
|
|
Proceeds from asset
sale
|
7
|
|
|
—
|
|
Investments in
acquisitions, net of cash acquired
|
(11)
|
|
|
(94)
|
|
Net cash used in
investing activities
|
(299)
|
|
|
(390)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
exercise of stock options
|
3
|
|
|
4
|
|
Proceeds from
borrowings
|
750
|
|
|
1,145
|
|
Payment of long term
debt
|
(479)
|
|
|
(945)
|
|
Excess tax benefits
from stock compensation
|
6
|
|
|
1
|
|
Common stock
repurchases
|
(7)
|
|
|
(5)
|
|
Contribution from
noncontrolling interest
|
—
|
|
|
5
|
|
Debt issue
costs
|
(4)
|
|
|
(6)
|
|
Payment of contingent
consideration obligation
|
(8)
|
|
|
—
|
|
Net cash provided by
financing activities
|
261
|
|
|
199
|
|
Net increase in cash
and cash equivalents
|
357
|
|
|
221
|
|
Cash and cash
equivalents, beginning of period
|
1,610
|
|
|
1,038
|
|
Cash and cash
equivalents, end of period
|
$
|
1,967
|
|
|
$
|
1,259
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
|
27
|
|
|
$
|
16
|
|
Income taxes
paid
|
$
|
145
|
|
|
$
|
110
|
|
Equity issued in
connection with acquisitions
|
$
|
13
|
|
|
$
|
132
|
|
CENTENE
CORPORATION
|
SUPPLEMENTAL
FINANCIAL DATA FROM CONTINUING OPERATIONS
|
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
MANAGED CARE
MEMBERSHIP
|
|
|
|
|
|
|
|
|
|
Arizona
|
210,900
|
|
|
202,200
|
|
|
204,000
|
|
|
202,500
|
|
|
189,200
|
|
Arkansas
|
45,400
|
|
|
43,200
|
|
|
38,400
|
|
|
36,600
|
|
|
31,100
|
|
California
|
178,700
|
|
|
171,200
|
|
|
163,900
|
|
|
144,700
|
|
|
131,100
|
|
Florida
|
470,300
|
|
|
463,100
|
|
|
425,700
|
|
|
411,200
|
|
|
313,800
|
|
Georgia
|
405,000
|
|
|
405,600
|
|
|
389,100
|
|
|
382,600
|
|
|
373,000
|
|
Illinois
|
209,100
|
|
|
184,800
|
|
|
87,800
|
|
|
31,300
|
|
|
29,500
|
|
Indiana
|
250,400
|
|
|
227,700
|
|
|
197,700
|
|
|
199,500
|
|
|
200,500
|
|
Kansas
|
143,000
|
|
|
143,700
|
|
|
143,300
|
|
|
144,200
|
|
|
146,100
|
|
Louisiana
|
358,900
|
|
|
359,500
|
|
|
152,900
|
|
|
150,800
|
|
|
148,600
|
|
Massachusetts
|
61,500
|
|
|
64,500
|
|
|
48,400
|
|
|
46,600
|
|
|
47,200
|
|
Michigan
|
2,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Minnesota
|
10,900
|
|
|
9,500
|
|
|
9,500
|
|
|
9,500
|
|
|
9,400
|
|
Mississippi
|
250,600
|
|
|
141,900
|
|
|
108,700
|
|
|
99,300
|
|
|
97,400
|
|
Missouri
|
82,600
|
|
|
75,600
|
|
|
71,000
|
|
|
64,900
|
|
|
58,700
|
|
New
Hampshire
|
70,800
|
|
|
67,500
|
|
|
62,700
|
|
|
56,600
|
|
|
39,500
|
|
Ohio
|
287,100
|
|
|
296,000
|
|
|
280,100
|
|
|
261,000
|
|
|
225,900
|
|
South
Carolina
|
112,600
|
|
|
106,000
|
|
|
109,700
|
|
|
106,500
|
|
|
101,800
|
|
Tennessee
|
21,400
|
|
|
20,800
|
|
|
21,000
|
|
|
21,200
|
|
|
21,300
|
|
Texas
|
969,700
|
|
|
974,900
|
|
|
971,000
|
|
|
961,100
|
|
|
921,500
|
|
Vermont
|
2,800
|
|
|
1,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Washington
|
214,100
|
|
|
207,100
|
|
|
194,400
|
|
|
192,500
|
|
|
193,800
|
|
Wisconsin
|
78,600
|
|
|
82,100
|
|
|
83,200
|
|
|
74,700
|
|
|
67,300
|
|
Total at-risk
membership
|
4,437,100
|
|
|
4,248,500
|
|
|
3,762,500
|
|
|
3,597,300
|
|
|
3,346,700
|
|
Non-risk
membership
|
176,600
|
|
|
153,200
|
|
|
298,400
|
|
|
303,500
|
|
|
—
|
|
TOTAL
|
4,613,700
|
|
|
4,401,700
|
|
|
4,060,900
|
|
|
3,900,800
|
|
|
3,346,700
|
|
|
|
|
|
|
|
|
|
|
|
Medicaid
|
3,300,600
|
|
|
3,133,900
|
|
|
2,754,900
|
|
|
2,578,300
|
|
|
2,385,500
|
|
CHIP & Foster
Care
|
230,500
|
|
|
233,600
|
|
|
222,700
|
|
|
247,700
|
|
|
261,800
|
|
ABD, Medicare &
Duals
|
414,300
|
|
|
410,400
|
|
|
392,700
|
|
|
383,400
|
|
|
329,700
|
|
LTC
|
72,800
|
|
|
71,200
|
|
|
60,800
|
|
|
55,200
|
|
|
53,500
|
|
Health Insurance
Marketplaces
|
167,400
|
|
|
161,700
|
|
|
74,500
|
|
|
76,000
|
|
|
75,700
|
|
Hybrid
Programs
|
—
|
|
|
—
|
|
|
18,900
|
|
|
19,900
|
|
|
17,000
|
|
Behavorial
Health
|
203,900
|
|
|
195,100
|
|
|
197,000
|
|
|
195,500
|
|
|
182,200
|
|
Correctional
Healthcare Services
|
47,600
|
|
|
42,600
|
|
|
41,000
|
|
|
41,300
|
|
|
41,300
|
|
Total at-risk
membership
|
4,437,100
|
|
|
4,248,500
|
|
|
3,762,500
|
|
|
3,597,300
|
|
|
3,346,700
|
|
Non-risk
membership
|
176,600
|
|
|
153,200
|
|
|
298,400
|
|
|
303,500
|
|
|
—
|
|
TOTAL
|
4,613,700
|
|
|
4,401,700
|
|
|
4,060,900
|
|
|
3,900,800
|
|
|
3,346,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE PER MEMBER
PER MONTH(a)
|
$
|
356
|
|
|
$
|
349
|
|
|
$
|
360
|
|
|
$
|
354
|
|
|
$
|
344
|
|
|
|
|
|
|
|
|
|
|
|
CLAIMS(a)
|
|
|
|
|
|
|
|
|
|
Period-end
inventory
|
1,501,600
|
|
|
1,217,000
|
|
|
1,086,600
|
|
|
1,021,200
|
|
|
771,900
|
|
Average
inventory
|
946,500
|
|
|
841,000
|
|
|
806,000
|
|
|
660,200
|
|
|
603,700
|
|
Period-end inventory
per member
|
0.34
|
|
|
0.29
|
|
|
0.29
|
|
|
0.28
|
|
|
0.23
|
|
(a) Revenue
per member and claims information are presented for the Managed
Care at-risk members.
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF
EMPLOYEES
|
15,800
|
|
|
14,800
|
|
|
13,400
|
|
|
12,900
|
|
|
12,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
2015
|
|
2015
|
|
2014
|
|
2014
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
DAYS IN CLAIMS
PAYABLE (b)
|
45.5
|
|
|
45.5
|
|
|
44.2
|
|
|
43.1
|
|
|
42.9
|
|
(b) Days
in Claims Payable is a calculation of Medical Claims Liabilities at
the end of the period divided by average claims expense per
calendar day for such period.
|
|
|
|
|
|
|
|
|
|
|
CASH, INVESTMENTS
AND RESTRICTED DEPOSITS (in millions)
|
Regulated
|
$
|
3,667
|
|
|
$
|
3,345
|
|
|
$
|
3,082
|
|
|
$
|
2,829
|
|
|
$
|
2,353
|
|
Unregulated
|
82
|
|
|
97
|
|
|
85
|
|
|
70
|
|
|
50
|
|
TOTAL
|
$
|
3,749
|
|
|
$
|
3,442
|
|
|
$
|
3,167
|
|
|
$
|
2,899
|
|
|
$
|
2,403
|
|
|
|
|
|
|
|
|
|
|
|
DEBT TO
CAPITALIZATION
|
37.1
|
%
|
|
38.0
|
%
|
|
33.5
|
%
|
|
36.4
|
%
|
|
35.3
|
%
|
DEBT TO
CAPITALIZATION EXCLUDING NON-RECOURSE
DEBT(c)
|
35.7
|
%
|
|
36.6
|
%
|
|
31.7
|
%
|
|
34.6
|
%
|
|
33.4
|
%
|
(c) The
non-recourse debt represents the Company's mortgage note payable
($69 million at June 30, 2015).
|
Debt to
Capitalization is calculated as follows: total debt divided by
(total debt + total equity).
|
Operating
Ratios:
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Health Benefits
Ratios:
|
|
|
|
|
|
|
|
Medicaid, CHIP,
Foster Care & Health Insurance Marketplaces
|
85.6
|
%
|
|
84.7
|
%
|
|
86.5
|
%
|
|
85.8
|
%
|
ABD, LTC &
Medicare
|
93.7
|
|
|
94.9
|
|
|
93.4
|
|
|
94.0
|
|
Specialty
Services
|
86.9
|
|
|
80.4
|
|
|
86.0
|
|
|
84.0
|
|
Total
|
89.1
|
|
|
88.9
|
|
|
89.4
|
|
|
89.1
|
|
|
|
|
|
|
|
|
|
Total General &
Administrative Expense Ratio
|
8.5
|
%
|
|
8.6
|
%
|
|
8.5
|
%
|
|
8.7
|
%
|
MEDICAL CLAIMS
LIABILITY (In millions)
|
|
|
|
|
|
|
|
The changes in
medical claims liability are summarized as follows:
|
|
|
|
|
|
|
|
|
Balance, June 30,
2014
|
|
$
|
1,394
|
|
Incurred related
to:
|
|
|
Current
period
|
|
15,216
|
|
Prior
period
|
|
(199)
|
|
Total
incurred
|
|
15,017
|
|
Paid related
to:
|
|
|
Current
period
|
|
13,193
|
|
Prior
period
|
|
1,126
|
|
Total
paid
|
|
14,319
|
|
Balance, June 30,
2015
|
|
$
|
2,092
|
|
Centene's claims reserving process utilizes a consistent
actuarial methodology to estimate Centene's ultimate
liability. Any reduction in the "Incurred related to: Prior
period" amount may be offset as Centene actuarially determines
"Incurred related to: Current period." As such, only in the
absence of a consistent reserving methodology would favorable
development of prior period claims liability estimates reduce
medical costs. Centene believes it has consistently applied
its claims reserving methodology in each of the periods
presented. Additionally, as a result of minimum HBR and other
state return of premium programs, approximately $65 million of the "Incurred related to: Prior
period" was reclassified to Return of Premium Payable.
The amount of the "Incurred related to: Prior
period" above represents favorable development and includes the
effects of reserving under moderately adverse conditions, new
markets where we use a conservative approach in setting reserves
during the initial periods of operations, receipts from other third
party payors related to coordination of benefits and lower medical
utilization and cost trends for dates of service prior to
June 30, 2014.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/centene-corporation-reports-2015-second-quarter-results-300119561.html
SOURCE Centene Corporation